In 2020, the EU risks losing Hungary. This is the conclusion reached by economists at Danish investment bank Saxo Bank. The organization claims that over 15 years of EU membership, Hungary has become a successful economy in the region.
According to Eurostat, the country has one of the fastest GDP growth rates (1.1%) - more than Germany (0.1%), Italy (0.1%) and France (0.3%).
Moreover, Hungary is among the European countries with the lowest unemployment rate (3.5%). For comparison, in Spain this figure is 14.2%, in Italy - 9.7%, in France - 8.5%, and the average EU level - 6.3%.
At the same time, Hungary ranks first in the EU in reducing public debt. According to the latest Eurostat estimates, over the year (from mid-2018 to mid-2019), the country's debt burden decreased from 73.5% to 68.2% of GDP.
However, Saxo Bank expects the completion of the economic growth phase. It's all about the relationship between Brussels and the Hungarian government. So, back in 2018, the European Parliament accused Budapest of "renouncing European values: respect for democracy, equality, the rule of law and human rights." As a result, EU authorities launched a penalty procedure under Article 7 of the Lisbon Treaty. As one of the sanctions measures, Hungary may lose its voting rights in the Council of the European Union.
“The EU refers to the restrictions introduced in the country. The Hungarian leadership replies that the state primarily defends its culture. The situation between the Hungarian authorities and European parliamentarians remains unstable, and in 2020, as the procedure for Article 7 moves slowly through the EU bureaucratic system, it will become even more difficult for the parties to agree, ”Saxo Bank analysts said in their study.
According to Budapest, the European authorities are trying to punish Hungary for refusing to accept migrants. This was announced in September 2018 by the Minister of Foreign Affairs of the country Peter Siyyarto.
Hungary openly opposes the system for the distribution of refugees in the European Union. The program gives EU leadership the right to independently resettle migrants in the block states without the consent of local governments.
“For Budapest, migration policy is a key moment in the dispute with the EU. It so happened that the state is at the crossroads of migration flows. Since 2015, a large number of refugees entered the countries of Western and Northern Europe precisely through Hungary, and many settled on its territory, ”said Yuri Kvashnin, head of the Center for European Studies of IMEMO RAS, RT.
According to Saxo Bank experts, Budapest has taken a tough stance and does not intend to yield to Brussels. For this reason, analysts predict the country is actively building up economic ties with Russia and Turkey.
“Hungarian Prime Minister Viktor Orban aims to maintain the closest partnership with Russia. This is largely due to profitable joint projects - for example, the construction of the Paks-2 nuclear power plant, ”said Yuri Kvashnin.
Disadvantageous course
The expert community does not expect anything good from Hungary’s expected withdrawal from the EU. Economists emphasize that, first of all, Budapest risks losing financial subsidies from Brussels and losing the free access of its goods to the European market. About this RT told the head of the analytical department of AMarkets Artyom Deev.
“In 2017, Hungary received € 4 billion from the European Union, and € 5 billion in 2018. In addition, the EU accounts for 82% of Hungarian exports,” the expert said.
According to Saxo Bank analysts, the loss of European tranches could provoke a panic in the financial market of Hungary. As a result, the national currency rate risks falling by 12% against the euro.
“The Hungarian currency can reach a historic low of 375 forints per euro. The country may also face a serious outflow of capital due to the revision by European companies of their investment plans for Hungary, ”Saxo Bank notes.
Hungary’s possible exit from the EU could be a financial blow for other states and result in trade losses for Europe, said Gaydar Hasanov, an expert at the International Financial Center.
“Hungary is very important for the EU, as the country has an ideal geographical location for the construction of trade and export centers. The loss of such a profitable “point” may trigger a decrease in trade in Hungary itself and in neighboring countries, ”the analyst added.
Budapest’s projected exit from the EU could threaten the entire agricultural sector of the European Union. Hasanov emphasized that Hungary is one of the most developed agricultural economies in Europe, where the required EU grain is grown in large volumes.
“Hungarian agriculture is now Europe’s fast-growing agricultural sector. Over the past few years, the industry has grown by more than 60% and continues to grow. It is clear that in this matter other countries will not be able to overtake Hungary, therefore its exit from the EU is completely unprofitable for anyone, ”Hasanov concluded.